Profit booking drags Indian markets near neutral lines

A profit booking dragged Indian equity benchmarks near their neutral lines in early afternoon deals, with both Sensex and Nifty trading marginally higher, amid positive cues from other Asian markets. Traders were cautious, as Reserve Bank Governor Shaktikanta Das said the frequent food price spikes pose a risk to anchoring of inflation expectations and called for timely supply side measures to limit such shocks. However, the street took a note of Prime Minister Narendra Modi’s statement that India is seen as a combination of openness, opportunities and options as the world sees optimism and confidence in the Indian economy. The prime minister said that during the last nine years, India has become the fifth largest global economy and it has increased its competitiveness and enhanced transparency.

On the global front, Asian markets were trading higher, after Singapore's consumer price inflation moderated further in July to the lowest level in more than one and-a-half years, primarily due to lower charges for private transport. The data published by the Monetary Authority of Singapore and the Ministry of Trade and Industry showed that the consumer price index, or CPI, climbed 4.1 percent year-over-year in July, slower than the 4.5 percent increase in the previous month. 

The BSE Sensex is currently trading at 65490.65, up by 57.35 points or 0.09% after trading in a range of 65430.89 and 65913.77. There were 19 stocks advancing against 11 stocks declining, while one stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.60%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were Realty up by 1.02%, Power up by 0.87%, Utilities up by 0.69%, IT up by 0.51% and Industrials up by 0.44%, while Metal down by 0.18% and Energy down by 0.04% were the only losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.80%, Asian Paints up by 1.45%, Axis Bank up by 1.01%, Infosys up by 0.87% and Ultratech Cement up by 0.74%. On the flip side, Jio Financial Services down by 4.99%, Reliance Industries down by 0.52%, NTPC down by 0.50%, TCS down by 0.42% and Tata Steel down by 0.34% were the top losers.

Meanwhile, domestic rating agency Crisil in its latest report has said that top Indian states' spending on social welfare is set to touch a 10-year high of Rs 4 lakh crore, or 1.7 per cent of their combined Gross State Domestic Product (GSDP), in the ongoing fiscal (FY24). After analysing budgets of top 11 states, which account for over three-fourths of the aggregate GSDP, it said the growth in social welfare schemes is expected to clock a 16 per cent jump in compounded annual growth rate between 2017-18 and 2023-24. The revenue receipts grew by 11 per cent during the same period. 

Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Telangana, Rajasthan, West Bengal, Madhya Pradesh, Andhra Pradesh and Kerala were the 11 states accounted for in the Crisil report. Rating agency said while allocation towards social welfare schemes is seen essential considering India's demography, a steady increase in the same without commensurate increase in revenues may have an impact the credit profiles of the states in the longer run. It also said these spends were 1.2-1.3 per cent of GSDP on an average before FY18, which has now gone up to 1.7 per cent.

The report further said the higher growth on social welfare schemes is due to states prioritising financial assistance to certain target demographics in the form of direct transfers, pensions and cash incentives, and, in some instances, to honour election commitments. It said ‘social welfare; spending does not include expenditure on education, agriculture, public health and other key sectors, which are budgeted separately. It noted that among the non-committed expenditure items, social welfare schemes have the highest share at 13 per cent of the overall amount, adding that such spending is higher than education (10-11 per cent), power (6-7 per cent), agriculture (6-7 per cent) and public health (4-5 per cent). It said the share of social welfare schemes in the non-committed expenditure stood at 10 per cent in FY18.

The CNX Nifty is currently trading at 19456.05, up by 12.05 points or 0.06% after trading in a range of 19439.95 and 19584.45. There were 30 stocks advancing against 20 stocks declining, while one stock remained unchanged on the index.

The top gainers on Nifty were Adani Enterprises up by 2.26%, BPCL up by 1.80%, Indusind Bank up by 1.75%, Asian Paints up by 1.41% and Axis Bank up by 1.00%. On the flip side, Jio Financial Services down by 4.99%, Hindalco down by 1.22%, Divi's Laboratories down by 1.17%, LTIMindtree down by 0.92% and ONGC down by 0.85% were the top losers.

All Asian markets were trading higher; Hang Seng advanced 372.04 points or 2.08% to 18,217.96, KOSPI increased 32.18 points or 1.27% to 2,537.68, Taiwan Weighted added 193.97 points or 1.16% to 16,770.87, Nikkei 225 surged 276.95 points or 0.86% to 32,287.21, Shanghai Composite strengthened 9.41 points or 0.31% to 3,087.81, Straits Times rose 6.83 points or 0.22% to 3,181.01 and Jakarta Composite gained 1.27 points or 0.02% to 6,922.68.